What is a net lease REIT?
In commercial real estate, a net lease is a lease in which in addition to rent the tenant is required to pay a portion, or all, of the taxes, insurance and maintenance costs for a property during the lease term:
|
Property Taxes |
Property Insurance |
Property Maintenance and Repairs |
Net Lease |
Tenant Responsibility |
|
Double Net Lease or NN Lease |
Tenant Responsibility |
Tenant Responsibility |
Triple Net Lease or NNN Lease |
Tenant Responsibility |
Tenant Responsibility |
Tenant Responsibility |
GNL owns and invests in commercial properties, principally in the U.S., United Kingdom, and Western Europe, that are net leased to the tenant.
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What is straight-line rent (“SLR”) and Why do REITs report it?
Real estate companies such as REITs "straight line" rents because generally accepted accounting principles require it. Straight-lining averages the tenant's rent payments over the life of the lease.
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What is EBITDA?
Earnings Before Interest, Taxes, Depreciation and Amortization.
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What is a capitalization rate or “cap” rate?
The capitalization rate is the rate of return on an investment property. It is calculated as the net operating income earned on a property divided by the purchase price of the property.
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What is the initial capitalization rate or initial “cap” rate?
The initial capitalization rate is the rate of return generated by a newly acquired investment property at the time of acquisition. The initial capitalization rate does not take into account future factors such as rent escalators.
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What is an “average GAAP capitalization rate” or “average GAAP cap rate?”
An average GAAP capitalization rate is a rate of return on a real estate investment property based on the expected, annualized straight lined rent that the property will generate under its existing lease. A GAAP capitalization rate is calculated by dividing the annualized straight lined rent the property will generate (before debt service and depreciation and after fixed costs and variable costs) and the purchase price of the property
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